Last month, as part of the resolution of the impasse over the California state budget, AB10 was passed and signed into law by Governor Schwarzenegger. This piece of legislation amends California Labor Code Section 515.5, known as the “Computer Professional” exemption to state overtime laws.
Prior to this amendment, Section 515.5 required that “computer professionals” receive at least $36 per hour in order to be exempt from overtime payments. While the original legislation may have had a positive intent, the result was not because in order to qualify for this exemption computer professionals were required to track their hours to verify that they received the hourly minimum.
AB10 was the subject of a great deal of lobbying prior to its passage, with the plaintiff’s bar arguing that it would be the first step in the elimination of all hourly wage requirements. Others claimed the existing legislation was necessary to ensure that computer professionals were paid a living wage. The reality is very different.
AB10 is not about paying fair wages. Qualified computer engineers remain in high demand. This market demand is reflected in the fact that most computer professionals receive an annual salary that far exceeds the $75,000 minimum level set forth in Sec. 515.5 and includes stock options, benefits and other perquisites. And it should be noted that California’s minimum level remains more than three times what is required in other states where the federal standard applies.
AB10 is important to keeping jobs in California. Technology companies consistently rank among the top employers and best places to work in the state. But, we are in an era of increasing globalization where employment opportunities are moving to other states and countries. Some of the most attractive and portable jobs are those of the computer industry. The passage of AB10 brings California law more in line with other states by making the computer professional exemption a true exemption that can be relied on by companies. It will also help reduce the tsunami of wage hour class actions that arose under the previous legislation which resulted in companies paying litigation costs rather than investing in job creation.
In a global economy, California can not afford to be an island if it desires to keep taxpaying jobs for its citizens. Congratulations to the governor and California legislature. AB10 is a positive thing for its technology employers and employees, and for California.